Why Nintendo is evil

[The Kernel]

I have often accused Nintendo of being evil while many Nintendo lovers have accused me of just being a fanboy of either Sony or Microsoft. But I found an interesting article that reminded me of why I hate Nintendo in the first place, and it shows that my reasons are still just as valid today as they ever were.

Many people may not remember the NES/SNES days, but for me those were the gaming generations that inspired me to become a gamer. I loved the NES platform and the SNES only upped that even further. The very best of the 2D generation existed on the SNES and that hasn't changed even to this day.

At the time however, even though I was a kid I was still aware of some strange practices by Nintendo. It was downright impossible to find new games sometimes (this was worst with Super Mario 3 which took me over six months to find, but also applied to Zelda and other popular titles) and there was very little in the way of value priced gaming.

Later of course I came to realize that Nintendo had been constraining supply and was also engaging in bullying of retailers along with other nasty anti-competitive practices. It's truly amazing that they got away with some of that shit--it makes Microsoft look like saints by comparison.

Anyway, ever since Nintendo's fall from grace in the N64 days, that dynamic changed considerably. They no longer had the leverage with which to engage in these practices and things pretty much stayed within the relm of normal. However, I was always worried that a resurgent Nintendo home console would bring back the very same practices we'd seen before during the NES/SNES days.

Now I see this:

Even a year after launch, the Nintendo Wii still remains a hot item that rarely ever stays in retail stock –and comments from Nintendo of America president Reggie Fils-Aime indicate that demand will once again outstrip supply this holiday season.

“We have been sold out worldwide since we launched,” said Fils-Aime to the Mercury News. “Every time we put more into the marketplace, we sell more, which says that we are not even close to understanding where the threshold is between supply and demand.”

Fils-Aime adds that Nintendo is doing everything it can to meet the demand for Wii, and that “The issue is not a lack of production.”

“The issue is we went in with a curve that was aggressive, but the demand has been substantially more than that. And the ability to ramp up production and to sustain it is not a switch that you flick on. We're working very hard to make sure that consumers are satisfied this holiday, but I can't guarantee that we're going to meet demand. As a matter of fact, I can tell you on the record we won't,” said Fils-Aime.

In a previous story, the Nintendo president said that holiday supplies of the Wii will be “substantially more than the launch, substantially more than has been seen to date ... given the level of demand and given the fact that the more we put in, the more we sell, it is still going to be difficult to get your hands on the Wii.”

Since launch, the Wii has topped the sales charts. NPD sales data from August showed the Wii selling 403,600 units, while the Xbox 360 sold 276,000 and the PS3 130,600. The Wii also became the fastest selling console in history in the UK, and according to several sources, Nintendo’s latest machine is now the worldwide leader for the generation.

Now for a while, I could buy that the Wii's supply problems were legit, but here we nearly a year after launch and they still can't meet demand? I call bullshit, this is a blatant return to the sort of supply constraining that Nintendo is famous for. Read the words above carefully, they aren't even trying to hide it anymore. Now I'm sure some will argue that this just means the Wii is a tremendous success, but I don't buy it for a second. Sony managed to meet similar demand for the PS2 without any problems past the first few months.

None of this should take away from the fact that the Wii is fun to play. This is purely a management style at Nintendo that has been allowed to exist and is continuing now that they have the lead in the home console market again.

[salm]

How would they profit from voluntarily selling less units than they could?

[SirNitram]

How would they profit from voluntarily selling less units than they could?

Drink more conspiracy koolaid. Try a few blows to the head. Eventually you'll see things their way.

Or be braindead, but is there a difference?

[Beowulf]

Wii is selling more units per month than the competition. It almost manages to sell more units than the competition combined. Gee, that doesn't make it sound as if demand is extremely high.

[Darth Fanboy]

A current generation game system with a concept much different than the competition, under $300, designed for casual game players, fun to play in groups, that comes with a game....

Yeah I can see why it is sold out.

[DPDarkPrimus]

Nintendo has admitted they are stockpiling units to ship closer to Christmas time.

That's not evil, that's standard business practice.

And frankly, the success of the Wii has surprised everyone. There has never been a game console that was still impossible to find on shelves ten and a half months after launch!

[Praxis]

Now for a while, I could buy that the Wii's supply problems were legit, but here we nearly a year after launch and they still can't meet demand? I call bullshit, this is a blatant return to the sort of supply constraining that Nintendo is famous for. Read the words above carefully, they aren't even trying to hide it anymore. Now I'm sure some will argue that this just means the Wii is a tremendous success, but I don't buy it for a second. Sony managed to meet similar demand for the PS2 without any problems past the first few months.

Kernel, the theory that Nintendo is deliberately holding back supply is ridiculous at this point. Microsoft overshipped, if you'll recall, and their units are just sitting on the shelves; Nintendo has shipped more than Microsoft has in half the time and are still sold out.

Remember, the Wii has been out less than a year. The 360 has been out for almost two now. The Wii has sold more units than the 360.

So if Nintendo is deliberately cutting supply, then Microsoft must have REALLY constrained supply to have sold less. But wait, I thought Microsoft overshipped?

[The Kernel]

How would they profit from voluntarily selling less units than they could?

If you artificially maintain a shortage, you increase demand.

Kernel, the theory that Nintendo is deliberately holding back supply is ridiculous at this point. Microsoft overshipped, if you'll recall, and their units are just sitting on the shelves; Nintendo has shipped more than Microsoft has in half the time and are still sold out.

Remember, the Wii has been out less than a year. The 360 has been out for almost two now. The Wii has sold more units than the 360.

So if Nintendo is deliberately cutting supply, then Microsoft must have REALLY constrained supply to have sold less. But wait, I thought Microsoft overshipped?

What does this have to do with anything? The Wii has sold more obviously, which is why they would need to manufacture more. Now I'll grant that Nintendo didn't predict the Wii's success which is why I haven't thought much of it until now, but it doesn't take a year to ramp supply up on a consumer electronics device.

Also, the statements suggesting that no matter how many they ship demand increases is obviously bullshit. If you look at the premium that private sellers charge for the Wii on eBay for example, the ASP has been pretty much stagnant since a couple months after launch which indicates that they are keeping supply at a constant ratio beneath deman.

[General Zod]

If you artificially maintain a shortage, you increase demand.

I suppose you have some actual proof that they're doing this intentionally?

[DPDarkPrimus]

I never said that demand is still increasing. I said the demand is much, much higher than has ever been for a console.

[The Kernel]

If you artificially maintain a shortage, you increase demand.

I suppose you have some actual proof that they're doing this intentionally?

No, of course not. The only proof is circumstantial at best, and involves the following:

1) Execs at Nintendo of America are playing up the supply shortages, obviously aware that it is an advantage for the public to perceive a shortage.

2) Nintendo has historically engaged in illegal supply constraining in the US retail market.

3) The supply/demand curve has remained relatively constant judging by the price of resold Wii consoles.

Is this definitive? No. But it does remind me of Nintendo's practices in the 80's and early 90's which was really the point of this thread.

[CaptainChewbacca]

I never said that demand is still increasing. I said the demand is much, much higher than has ever been for a console.

Indeed, the Wii's total sales numbers have exceeded the Xbox 360, despite the 360 coming out a full year before. I really don't see any benefit to them creating artificial demand, since its not like they'd change the price.

[The Kernel]

I never said that demand is still increasing. I said the demand is much, much higher than has ever been for a console.

Bullshit, the Wii is selling extremely well but the demand isn't that far above the supply. Are Wii's selling for $800 on eBay?

[The Kernel]

I never said that demand is still increasing. I said the demand is much, much higher than has ever been for a console.

Indeed, the Wii's total sales numbers have exceeded the Xbox 360, despite the 360 coming out a full year before. I really don't see any benefit to them creating artificial demand, since its not like they'd change the price.

The purpose is to keep the Wii demand high by making it seem like it is an item that is difficult to get a hold of which therefore must mean good. This is not an uncommon practice at all and is in fact used quite frequently in certain retail markets.

[Uraniun235]

I'm not sure how any of this constitutes evil business practices. Oh no, Nintendo's not selling as much stuff to us as we'd like! Yeah, maybe it's manipulative, but if you're going to rail about that then you'd get far better returns from planning to burn down Madison Avenue...

[CaptainChewbacca]

I never said that demand is still increasing. I said the demand is much, much higher than has ever been for a console.

Bullshit, the Wii is selling extremely well but the demand isn't that far above the supply. Are Wii's selling for $800 on eBay?

No, they're going about $350. They also don't retail for $600 either.

[General Zod]

1) Execs at Nintendo of America are playing up the supply shortages, obviously aware that it is an advantage for the public to perceive a shortage.

2) Nintendo has historically engaged in illegal supply constraining in the US retail market.

3) The supply/demand curve has remained relatively constant judging by the price of resold Wii consoles.

Is this definitive? No. But it does remind me of Nintendo's practices in the 80's and early 90's which was really the point of this thread.

I'm failing to see any kind of actual problem here. Have you been dipping in the koolaid lately?

[Covenant]

I never said that demand is still increasing. I said the demand is much, much higher than has ever been for a console.

Bullshit, the Wii is selling extremely well but the demand isn't that far above the supply. Are Wii's selling for $800 on eBay?

Actually, one is going for 1,200 US Dollars, so... yes, actually. A lot of them are hovering around the 300-400 dollar mark, sure, but why should Nintendo want to flood the market with Wii consoles that might encourage them to deflate the cost? The Wii is a pretty good deal where it is right now, so I hardly see why engaging in normal business practices constitutes anything 'evil'. Nintendo is a big business and they play rough, but the amount of demand for the thing--like for the DS--has been ridiculous. And, honestly, have you played it? It's really fun. I can see how a lot of people would want one, and also why a lot of people would sell it back on ebay.

I don't get how this is really all that awful. Wouldn't it be simply bad business to behave otherwise?

[Darth Wong]

Kernel is probably half right, not in the sense that Nintendo is artificially limiting supply but in the sense that they have apparently decided that it's not worth it to spend the money to increase production output. He makes it sound as if it would cost them nothing to increase production, so the only explanation for supply shortfalls is that Nintendo executives are walking into the factory and screaming "WORK SLOWER!" at the employees.

Mind you, even if they were, it's not an "anti-competitive" practice and I'm not sure where he got the idea that it was. Using dominance in one market to leverage another market is an antitrust violation, but failing to flood the market is not. Nintendo doesn't even see a dime of these gouging markups on eBay, and for what it's worth, you can easily buy a Wii off the shelf around here.

[Stark]

I'm not understanding how 'hard to find on shelves' apparently 'increases demand' for a console. Do people who don't want a Wii see how hard they are to get, and decide they want one as an investment or something? The Ebay morons?

About the only thing I could see is if lower production than possible was intended to keep sales figures high for longer, ie make it take longer to fill out the whole userbase so every month you can say 'haha awesome sales figures'.

As Mike says, supply problems seem unique to the US market. Certainly in AU there are absolutely no supply problems whatsoever, and the only 'shortage' was poor stocking for nunchucks at launch (ie, imagining only 40% of people would want nunchucks).

[Civil War Man]

Keep in mind that limiting supply can very often hurt the company causing the shortage. For starters, as Mike pointed out, low supply can give birth to a black market, with all of the profits from the increased price going directly to the seller.

Secondly, as innovative as the Wii is, it is by no means the only game in town. Maintaining a constant inventory shortfall is going to drive many consumers to competing products that will supply the goods, even if the competing product is not exactly what they want. Someone fed up with a lack of Wiis may end up deciding they are better off with a 360, PS3, PC, or decide to save the money and just keep playing their previous generation consoles. And the thing is, when this happens, the consumer remembers the poor service, so a lot may decide not to buy that company's products in the future.

[Mad]

Nobody knows how long the high demand for the Wii will last. If Nintendo ramps production up too much and demand drops off sooner than hoped for, then Nintendo will have have just wasted a lot of money in expanding production.

[Surlethe]

I'm not understanding why they're constraining the market if they're not going to profit from it. If they're keeping the initial sale price at around $300, then what use is screwing with supply and demand?

[Dooey Jo]

I'm not understanding why they're constraining the market if they're not going to profit from it. If they're keeping the initial sale price at around $300, then what use is screwing with supply and demand?

Because they are evil, don't you see! Satoru Iwata is sitting in his offi... dark, scary castle and cackling with glee, admiring his own plan to fail to keep Wiis on the shelves in the US yet again. I even hear he takes advice from Satan himself! And he would have gotten away with not increasing production costs and avoiding paying for a potential unseen demand drop-off, if it wasn't for that meddling Kernel...

Sony managed to meet similar demand for the PS2 without any problems past the first few months.

Sony, one of the biggest electronics manufacturers in the world, could do it without any problems, therefore Nintendo must similarly be able to? Really now...

[Master of Ossus]

How would they profit from voluntarily selling less units than they could?

If you artificially maintain a shortage, you increase demand.

[/quote]

And this does what, retard? Raise the price? Problem with your theory is that Nintendo has NOT raised the price and so are not profiting from their artificial [sic] shortage.

What does this have to do with anything? The Wii has sold more obviously, which is why they would need to manufacture more. Now I'll grant that Nintendo didn't predict the Wii's success which is why I haven't thought much of it until now, but it doesn't take a year to ramp supply up on a consumer electronics device.

Ummm... yes it can. That's why Sony only released the PS2 in Japan, at first. Nintendo went with a worldwide release, which Sony has never managed and which Microsoft bungled badly.

Also, the statements suggesting that no matter how many they ship demand increases is obviously bullshit. If you look at the premium that private sellers charge for the Wii on eBay for example, the ASP has been pretty much stagnant since a couple months after launch which indicates that they are keeping supply at a constant ratio beneath deman.

I agree. It's clear that their quantity supplied is less than quantity demanded. How does this make it Nintendo's fault?

Increasing production isn't just a manner of turning up the Wii-spigot.